A Love/Hate Relationship with Credit Cards

There’s also been silver lining to switching from banks to credit cards for a credit line. Sue, my wife and business partner, pays almost all our bills with credit cards. She’ll only use cards that have a generous rewards program, and since we buy a lot of materials, we get lots of reward points. Our airfare to the recent Signage and Graphics Summit, for instance, resulted in points. The awesome Canon DSLR and lenses for the company: points. The new iMac for the customer service department: points. You get the idea.

The most worthwhile benefit to the card points, however, has been to our employees. During the boom times, we gave an annual bonus at Christmas; we would also give individuals bonuses throughout the year for exceptional performance or innovation. When the recession hit, though, all bonuses and incentives ended. And employees got the double whammy of seeing their hours cut and paychecks cut, too.

Then credit-card-rewards points came to the rescue. Throughout the year, Sue redeems points for the rewards in the form of gift cards, which employees like almost as much as cash, because serve the same purpose. The most popular are store, movie, restaurant, and iTunes gift cards. Thanks to credit-card companies, we have been able to restore our reward and annual cash-bonuses program to the levels of our most profitable years. The best news is it doesn’t cost us a dime.

PayPal, NFC, and the futureTwo other related topics worth noting are PayPal and NFC technology.
Our business accepts payment and buys things with PayPal – in fact, it’s surprising how often we pay with PayPal (and on a related note, how many parts we buy on eBay). Because we don’t get points with PayPal, we’re not motivated to find more vendors that accept it. However, because PayPal payments could help with cash flow and the transaction fees are smaller, we’d like to expand the use of the service in the future.
Another trend in payments has been the development of a mobile payment system called NFC (near-field communication). NFC is the hot new technology that makes the hearts of mobile carriers, Google, and credit-card companies go pitter pat. It’s rumored to be a feature of this spring’s iPhone 5. In the future, your customers’ smart phone will be used as a credit card – basically, just hovering it about four inches above your NFC receiver (which can be another NFC-equipped phone) will initiate the transaction. The customer gets a paperless receipt transmitted by Bluetooth from the driver’s phone. I look forward to having our delivery driver “touch phones” with a customer at a tradeshow and we’re then paid in full before she gets back in the truck.

In the future, then, the credit card may go the way of the personal checkbook. Smartphones may ultimately replace the physical credit card. More and more of our transactions may take the form of PayPal. However we have to pay for stuff, I just hope they never drop the points.